It’s well known by now that an overwhelming percentage of seniors want to age in place, growing old in their present home. We’ve written about this idea many times here on the AgingOptions blog, most recently in this article from last summer. However, a recently-published Kaiser Health News article combined with an updated housing report from Harvard University are casting doubt on the viability of many seniors’ hopes and dreams. The bottom line is that, with rising remodeling costs, aging homes and growing debt, fixing up a house to age in place may prove to be beyond the reach of many retirees.
Aging in Place is a Fine Idea, but Costs of Home Renovation are Skyrocketing
The article from Kaiser Health News, written by reporter Sharon Jayson and published a few weeks ago, comes with a straightforward headline: “For Boomers Reframing Aging, Age-Proofing A Home Won’t Come Cheap.” Jayson tells the story of an Austin, Texas couple in their 70s who are remodeling a 2,700 square foot ranch-style home with all the amenities an aging couple could need: wider halls and doorways, easy-entry shower, and a fully-accessible kitchen, for example. “We wanted to find a house that we could live in literally for the rest of our lives,” the husband told Kaiser Health News. As the article goes on, it appears clear that this couple has the means to accomplish their dream – between the cost of the house and the cost of the down-to-the-studs remodel, they will have sunk about $1 million into their new home.
“For most of American history, people have moved in with relatives or gone to a care facility to live out their final years,” says the Kaiser article. “Baby boomers don’t want either, and those with resources have generally created the modern idea of remaking old age to fit their lifestyle and retrofitting their homes for aging in place.” However, for a large number of boomers, those lifestyle dreams are about to collide with reality, because, as Jayson writes, “Aging in place is a major financial commitment, one that may be at odds with retirees’ plans to downsize their lives and budgets and squirrel away cash in anticipation of rising health care costs.” The Kaiser Health News report cites the 2019 report from Harvard University’s Joint Center for Housing Studies that reinforces these concerns.
Harvard Study Says Many Seniors Can’t Afford Costs of Home Renovation
We took a look at the Harvard study and it paints a mixed picture. Well-off seniors like the couple from Austin appear to be faring just fine, but a very large and rising percentage of retirees are facing a much bleaker financial reality. The Harvard report cites growing income disparity for older Americans in the wake of the Great Recession, and says that, for many, “ensuring financial and housing security in retirement will be a struggle.” Kaiser points to a recent survey of 1,000 people age 65 and older by the California-based Senior Care Action Network in which 80 percent of respondents expressed concern about their ability to age in place. “The driver appears to be financial,” said SCAN: “About 60 percent said they have less than $10,000 in savings (including investments and retirement plans).” With such limited resources, there’s little likelihood that seniors will be able to afford the extensive remodeling that most older homes will require to turn them into safe places to age.
“Given their high homeownership rates, most older adults live in single-family homes,” the Harvard study found. “Of the 24 million homeowners age 65 and over, fully 80 percent lived in detached single-family units in 2017. The majority of these homes are now at least 40 years old and therefore may present maintenance challenges for their owners.” Many seniors have lived in their homes for many years and are facing the need for expensive fixes before they can even think about remodeling. “For example, heating, ventilation, and air conditioning systems typically last 15–25 years, while shingle roofs last about 20 years,” says the study. “Replacement costs can be substantial.”
How Can Seniors Pay for Costs of Home Renovation with Little or No Savings?
But paying for repairs and upgrades out of savings, which two-thirds of seniors do, will be impossible for many given the combination of meager savings and high indebtedness. “A growing share of older households are carrying housing and other types of debt well into their retirement years,” Harvard’s report warns. Three decades ago, barely one-quarter of homeowners aged 65–79 held a mortgage, and the balance averaged less than $17,000. Today, almost half of these seniors are still paying on a mortgage and the average balance hovers around $77,000. The number of 80-plus homeowners still carrying a mortgage has shot up from just 3 percent to 26 percent in 30 years, with a median debt of $43,000. At the same time, the Harvard study finds that, in parts of the country (like Seattle) where housing is expensive, roughly one-third of senior households are what’s termed “cost-burdened,” paying 30 percent or more of their income for housing. “While many households now of retirement age have the means to age in place or move to other suitable housing, a record number are cost burdened and will have few affordable housing options as they age,” the Harvard study warns.
Housing is Just One Element in a Bigger Retirement Picture
What’s the important take-away from all this data? We suggest, when it comes to your housing plans, that you need to plan carefully and – most important – plan realistically. And, of course, there’s far more to retirement planning than housing. If we were to ask you, “What’s the most important aspect of retirement planning?”, you might come up with several answers. Some say the most important thing is to get your financial house in order. Others would claim that making the right legal preparations is what really matters. You’ll hear some claim that good medical coverage is the critical element to a secure retirement, or that support from your family can help you secure a happy future. And, yes, some would say it’s essential to “get your actual house in order” by making sure you’ve got a solid housing plan in place. Our philosophy at AgingOptions, however, is that every one of these elements is essential to a strong and solid retirement plan – the kind we call a LifePlan. A LifePlan combines financial, legal, medical, family and housing plans into one comprehensive strategy that will guide your steps into the retirement of your dreams.
Please accept our invitation and join Rajiv Nagaich at one of our free LifePlanning Seminars. In these highly enjoyable and information-packed sessions, you’ll discover just how powerful a LifePlan can be. You’ll find a complete listing of seminar dates, times and locations here on our Live Events page where you can register for the LifePlanning Seminar of your choice. Bring your family, your friends and your questions. We’ll look forward to meeting you!
(originally reported at www.khn.org)